According to analysts, the settlement is probably the best thing for both the SEC and Musk and Tesla, because the SEC is showing it can act to enforce change in protecting shareholders, while Musk-removed as chairman-will keep its CEO role at Tesla: a role analysts and Tesla believers see as crucial for the company.
Elon Musk will give up the role of Tesla Inc. chairman and pay a $20 million penalty to settle fraud charges brought by the USA over his claims about taking the company private.
Tesla shares rebounded from last week's US lawsuit over Elon Musk's take-private tweets, as a settlement ensured the billionaire will keep calling the shots at the carmaker he's said is on the verge of profitability. The SEC eventually sued Musk for securities fraud on Thursday.
Tesla, which has repeatedly fallen short of its own manufacturing targets, probably will finish the quarter making 53 457 Model 3s, according to the Bloomberg Tracker, an experimental tool to monitor the rollout by using vehicle identification numbers to estimate production in real time.
Separately, Tesla agreed Saturday to pay $20 million to settle claims it failed to adequately police Musk's tweet.
Tesla will now be appointing two new independent directors to its board. Musk is Tesla's largest investor, holding a 20-percent stake in the company. Musk and Tesla each will pay a penalty of US$20 million, with the total US$40-million penalties to be "distributed to harmed investors under a court-approved process".
The SEC's lawsuit had sought to bar Musk from serving as an officer or director of a public company, a prospect that rattled investors. Musk said August 7 in a company blog post that he was considering taking Tesla private at $420 per share, representing a 20% premium over the stock price following the company's second-quarter earnings release. "We are very close to achieving profitability and proving the naysayers wrong, but to be certain, we must execute really well tomorrow (Sunday)".
It was precisely his Twitter postings about his idea to remove Tesla from the stock market, which led him now to resign from the post of chairman of Tesla's board of directors.